Tag Archives: cloud

Microsoft reported a big quarter (in terms of revenue) for the three months ending December 31st, with revenue of $28,918 million.

What’s notable? Mainly the big jump in Microsoft’s recent success stories: year on year Office 365 up by 41%, Azure up by 98%, Dynamics 365 up by 67%.

Windows is flat/weak as you would expect, and Surface hardware is standing still. Xbox grew a bit following the launch of Xbox One X.

LinkedIn is growing: revenue of $1.3 billion and “sessions growth of over 20%” in the quarter. In the earnings webcast, Microsoft’s Amy Hood said that the LinkedIn acquisition has both performed better, and seems more strategic, now than it did at the time.

Hood also made reference to the company’s ability to up-sell cloud users to higher-margin services. “Office 365 commercial revenue increased 41 percent from installed base growth across all customer segments, and ARPU [Average Revenue per User] expansion from continued customer migration to higher value offers in the E3 and E5 workloads.”

This point is key and is the answer (from the provider’s point of view) to the lower margins implicit in moving from software to services. When Microsoft sells a licence for you to use Windows or Office, the margin is huge because reproducing the software, or providing it for download, costs almost nothing; whereas with a subscription there is significant cost to providing the service. However the subscription has advantages which offset this, in particular the continuing interaction with the customer that both provides data, which the customer as well as the provider can mine (subject to appropriate privacy controls), and gives opportunity for the provider to extend the relationship into new or upgraded services.

CEO Satya Nadella fielded a good question about Microsoft losing out to Sony in gaming and to Alexa and Google Home in voice devices. On gaming, Nadella referred to the PC alongside Xbox as a strategic asset. “PC gaming is a growth market,” he said, as well as software such as Minecraft now on mobile devices, giving the company a broad reach. He also remarked on Azure as a gaming back end.

As for Cortana in the home (or absence from), Nadella said that the focus is on the server-side cognitive services. He also talked about voice input and control of Office 365. The key point though was that Microsoft wants to work both with its own and other voice assistant devices so it can win on services even when competitor devices are in use. “One-turn dialogs on one speaker in one home, that’s just not our vision,” he said.

Nadella made another key point in the webcast, in answer to a question about how Azure Stack (a packaged version of Azure for installation on-premises) will impact Azure. “Computing is becoming more distributed, not less distributed,” he said. IoT and sensors play a large part in this. Everything goes to the cloud but computing on the edge (the new buzzword for local processing) is important for efficiency.

It is easy to see ways in which Microsoft could stumble. The PC will decline as the number of users who need a desktop or laptop computer diminishes. Microsoft’s failure in mobile could prove costly as competitors use synergy with their own applications and cloud services to steer customers away. There are opportunities such as home automation and payments which seem closed to the company now.

Then again, strong results such as these show how the company can succeed by continuing to migrate its business users to cloud services. It remains deeply embedded in business computing.

Microsoft has futuristic domes as part of its Envision event, running alongside Ignite here in Orlando. Ignite is the company’s main technical event of the year, focusing mainly on IT Pros but embracing pretty much the whole spectrum of Microsoft’s products and services (maybe not much Xbox!). With the decline of the PC and retreat from mobile, and a server guy at the helm, the company’s focus has shifted towards cloud and enterprise, making Ignite all the more important.

This year sees around 25-30,000 attendees according to a quick estimate from one of the PRs here; a little bigger than last year’s event in Atlanta.

Microsoft will present itself as an innovative company doing great things in the cloud but the truth is more complex, much though I respect the extent to which the business has been transformed. This is a company with a huge amount of legacy technology, designed for a previous era, and its challenge has been, and still is, how to make that a springboard for moving to a new way of working as opposed to a selling opportunity for cloud-born competitors, primarily Amazon Web Services (AWS) and Google, but also the likes of Salesforce and Dropbox.

If there is one product that has saved Microsoft, it is probably Exchange, always a solid email server and basic collaboration tool. Hosted Exchange is the heart of Office 365 (and BPOS before it), making it an easy sell to numerous businesses already equipped with Office and Outlook. Email servers are horrible things to manage, so hosted has great appeal, and it has driven huge uptake. A side-effect is that it has kept customers using Office and to some extent Windows. A further side-effect is that it has migrated businesses onto Azure Active Directory, the directory behind Exchange Online.

Alongside Office 365, the Azure cloud has matured into a credible competitor to AWS. There are still shortcomings (a few of which you can expect to be addressed by announcements here at Ignite), but it works, providing the company with the opportunity to upsell customers from users of cloud infrastructure to consumers of cloud services, such as Azure IoT, a suite of tools for gathering and analysing data.

The weakness of Microsoft’s cloud efforts has been the moving parts between hosted services and Windows PCs, and legacy pieces that do not work as you would expect. OneDrive has been a persistent annoyance, with issues over reliable document sync and limitations over things like the number of documents in a folder and the total length of a path. And where are my Exchange Public Folders, or any shared folders, in Outlook for IoS and Android? And why does a PC installation of Office now and again collapse with activation or other issues, so that the only solution is removal and reinstall?

At Ignite we will not hear of such things. Instead, Microsoft will be presenting its vision of AI-informed business collaboration. Think “Facebook of business”, powered by the “Microsoft graph”, the sum of data held on each user and their files and activity, now combined with LinkedIn. The possibilities for better-informed business activity, and systems that know what you need before you ask, are enticing. Open questions are how well it will work, and old issues of privacy and surveillance.

Such things also can only work if businesses do in fact commit more of their data to Microsoft’s cloud. The business case for this is by no means as simple as the company would have us think.

Gartner reports that worldwide server shipments have declined by 4.2% in the first quarter of 2017.

Not a surprise considering the growth in cloud adoption but there are several points of interest.

One is that although Hewlett Packard Enterprise (HPE) is still ahead in revenue (over $3 billion revenue and 24% market share), Dell EMC is catching up, still number two with 19% share but posting growth of 4.5% versus 8.7% decline for HPE.

In unit shipments, Dell EMC is now fractionally ahead, with 17.9% market share and growth of 0.5% versus HPE at 16.8% and decline of 16.7%.

Clearly Dell is doing something right where HPE is not, possibly through synergy with its acquisition of storage vendor EMC (announced October 2015, completed September 2016).

The larger picture though is not great for server vendors. Businesses are buying fewer servers since cloud-hosted servers or services are a good alternative. For example, SMBs who in the past might run Exchange are tending to migrate to Office 365 or perhaps G Suite (Google apps). Maybe there is still a local server for Active Directory and file server duties, or maybe just a NAS (Networked Attached Storage).

It follows that the big cloud providers are buying more servers but such is their size that they do not need to buy from Dell or HPE, they can go directly to ODMs (Original Design Manufacturers) and tailor the hardware to their exact needs.

Does that mean you should think twice before buying new servers? Well, it is always a good idea to think twice, but it is worth noting that going cloud is not always the best option. Local servers can be much cheaper than cloud VMs as well as giving you complete control over your environment. Doing the sums is not easy and there are plenty of “it depends”, but it is wrong to assume that cloud is always the right answer.

Microsoft has opened “multiple data centre locations in the UK” to run Azure and Office 365 cloud services.

I went to the Azure portal to create a new VM, to see the new options. It looks like you have to use the new portal. Here is what I got in the old portal:

In the new one though, I can choose between UK South and UK West.

An Azure region is composed of multiple data centres so this looks like a substantial investment. According to this document, the new regions are located in Cardiff and London.

The new infrastructure supports Azure and Office 365 today, with Dynamics CRM Online promised for the “first half of 2017”, according to the announcement.

Early customers are the Ministry of Defence, South London and Maudsley NHS Foundation Trust, Aston Martin, Capita and Rosslyn Analytics.

The announcement will help Microsoft and its partners sell these services to UK businesses concerned about compliance issues; there may also be some latency benefit. That said, Microsoft is a US corporation and the US government has argued that it can access this data with only a US search warrant. Microsoft has resisted this and won an appeal in July 2016; however there could always be new legislation. There is no simple answer.

Amazon Web Services has also announced plans for UK data centres; in fact, AWS was the first to reveal plans, but Microsoft has been quicker with implementation.

Microsoft Outlook 2016 has a new feature which the company highlighted when it first appeared, which is that it sends attachments as links by default, if they are stored in network-accessible locations. The idea is to prevent proliferation of different versions if several respondents make changes and email them back. It also means that everyone has the latest version. Good stuff, right?

I am not sure. Of course Outlook is meant to give you the choice about whether to send as a link or as a copy, but we all know that busy people just click and expect it to work; they mostly will not think through which method is appropriate in a particular case, or in some cases, even understand the difference. One of the implications of sending links is that the document received may not be what is sent. For example, consider this scenario:

1. Hmm, shall I send the minutes of our last meeting to this person at supplier X? Better check there is nothing sensitive in it. [Checks]. OK, send.

2. Colleague happens to look at minutes, thinks, why did we not minute our difficulties with supplier X? Adds section of sensitive information and proposal to switch to supplier Y.

3. Person at supplier X receives document …

OK, my scenario is somewhat contrived, but you can see the underlying issue.

There is also the question of whether the mechanism behind this feature is really robust. It is not in fact a simple feature. What is meant to happen is that Outlook detects whether your document can be sent as a link, and if it can, interacts with SharePoint to create a magic link with either view or edit permissions. In my experience, it is easy to end up sending an attachment that cannot in fact be accessed by the person at the other end.

I have an internal SharePoint and soon figured out that I had to prevent Outlook from sending documents as links. The URL I use for SharePoint internally is not accessible externally, which is perhaps a flaw in my setup, but not one that has ever caused problems before. In any case, I would prefer not to give out any magic links to documents in my SharePoint; it just seems an unnecessary security risk.

In the case of Office 365, note that external sharing may be switched off, in which case links will not work. External sharing may also be disabled for specific sites.

Maybe Outlook 2016 is smart enough to detect whether or not external sharing is enabled, but if so, this does seem to go wrong sometimes. I have seen cases where users send an attachment link, but the recipient cannot access the document. Rather, they click the link and get a “can’t be found in directory” error or similar.

Another issue is that Outlook 2016 does not always offer you the choice of link or attachment. Here is how it is meant to work. What happens sometimes though is that the attachment does not end up in the “attached” header at the top of the email, but rather in the body. In this scenario, you actually end up with a small Word table (Outlook messages use the Word editor) that cannot be converted into a standard attachment:

Note the little icon, an embedded image, which includes a cloud to give you a clue that this is not really attached. It also seems to mess up text formatting; note that my typing is now Times New Roman rather than Calibri. Another Outlook mystery.

This problem only seems to happen if you select a file from Outlook 2016’s recently accessed document list, which appears when you click the new Attach File button:

So how do you prevent this behaviour? Given the difficulties it can cause, I thought Outlook might have an option to disable sending attachments as links, or at least to prevent it happening by default. I have not found such an option yet. One point to bear in mind is that in previous versions of Outlook it was not easy to send a document from SharePoint at all, unless you could access it from Windows Explorer. This means using WebDAV (“Open in Explorer”), or the still-problematic OneDrive for Business client. So the dropdown with recently accessed SharePoint and OneDrive documents is new and potentially welcome functionality.

Here are a couple of workarounds though. If you format an email as plain text, which you can set as default if you choose, then you will not get the embedded link that cannot be changed. Instead, you will get the dialog with options to link or attach a copy:

What if you want Outlook 2016 to behave like Outlook 2013 and earlier? Well, the Attach File with the dropdown is not customizable directly, but you can add an old-style Attach File button. To do this, start a new email, right-click the toolbar, and click Customize the Ribbon. Right-lick the New Mail Message section on the right, and choose Add new group. Then select the Attach File command on the left, and the new group on the right, and click Add. I have called my new group Custom:

The effect is that you now have two Attach File commands, one of which behaves just like Outlook 2013:

My custom Attach File is on the right in the image above, does not have a drop-down list, and simply selects a file using an insert file dialog.

I appreciate that these are workarounds and not complete solutions.

Did Microsoft really think through this feature? Why the bugs? Why no easy way to disable it? I wish I knew.

Revenue is down: Revenue overall was $million 23.8, $million 2.67 down on the same quarter in 2014. This is because cloud revenue has increased by less than personal computing has declined. The segments are rather opaque. We have to look at Microsoft’s comments on its results to get a better picture of how the company’s business is changing.

Windows 10: Not much said about this specifically, except that search revenue grew 21% overall, and “nearly 30% of search revenue in the month of December was driven by Windows 10 devices.” That enforced Cortana/Bing search integration is beginning to pay off.

Surface: Revenue up 29%, but not enough to offset a 49% decline in phone revenue.

Server products: Revenue is up 5% after allowing for currency movements.

Xbox: Xbox Live revenue is growing (up 30% year on year) but hardware revenue declined, by how much is undisclosed. Microsoft attributes this to “lower volumes of Xbox 360” which is lame considering that the shiny Xbox One is also available.

Further observations

This is a continuing story of cloud growth and consumer decline, with Microsoft’s traditional business market somewhere in between. The slow, or not so slow, death of Windows Phone is sad to see; Microsoft’s dismal handling of its Nokia acquisition is among its biggest mis-steps and hugely costly.

CEO Satya Nadella came from the server side of the business and seems to be shaping the company in that direction, if he had any choice.

Azure and Office 365 are its big success stories. Nadella said in the earnings call that “the enterprise cloud opportunity is massive, larger than any market we’ve ever participated in.”

More Personal Computing: What a daft name, more than what? Still, this includes Windows in all its non-server forms, Windows Phone both hardware and licenses, Surface hardware, gaming including Xbox, Xbox Live, and search advertising.

Microsoft has reported its financials for its first quarter. Making sense of these is harder than usual because the company has changed its segment breakdown (and the names are misleading). The new segments are as follows:

More Personal Computing: What a daft name, more than what? Still, this includes Windows in all its non-server forms, Windows Phone both hardware and licenses, Surface hardware, gaming including Xbox, Xbox Live, and search advertising.

Death of Windows Phone: Microsoft acquired Nokia’s Devices and Services business in April 2014. In fiscal year 2015, according to Microsoft’s 10-Q report, the company “eliminated approximately 19,000 positions in fiscal year 2015, including approximately 13,000 professional and factory positions related to the Nokia Devices and Services business.” This was rationalisation following the acquisition; the real blow came a year later. “In June 2015, management approved a plan to restructure our phone business to better focus and align resources (the “Phone Hardware Restructuring Plan”), under which we will eliminate up to 7,800 positions in fiscal year 2016.”

Windows Phone is not quite dead, but Microsoft seems to have given up on the idea of competing with Android and iOS in the mainstream. Year on year, phone revenue is down 58%, Lumia units down from 9.3 million to 5.8 million, non-Lumia phones down from 42.9 million to 25.5 million. This is what happens when you tell the world you are giving up.

Windows: Revenue down 7% “driven by declines in the business and consumer PC markets”.

Surface: Revenue down by 26% because Surface Pro 3 launched in June 2014; this should pick up following the launch of new Surface hardware recently.

Cloud: Microsoft’s “Commercial cloud” comprises Office 365 Commercial, Azure and Dynamics CRM online. All are booming. Azure revenue and usage more than doubled year on year, with 121% revenue growth. In addition, Office 365 consumer subscribers increased by 3 million in the quarter, to 18.2 million, an increase of nearly 20%.

Server products: Revenue is up 6% thanks to “higher revenue from premium versions of Microsoft SQL Server, Windows Server, and System Center”

Xbox: Steady, with Live revenue up 17%, Minecraft adding 17% to game revenue, and hardware revenue down 17% because of Xbox 360 declining (and by implication, not being replaced by Xbox One, a worrying trend).

Further observations

Is Microsoft now facing permanent long (but slow) decline in Windows as a client or standalone operating system? It certainly looks that way. The last hope is that Windows 10 in laptop, tablet and hybrid forms wins some users over from Mac computers and iPad/Android tablets. Despite some progress, Microsoft still has work to do before Windows delivers the smooth appliance-like experience of competing tablets, so I do not regard this as likely. The app ecosystem is also a problem. Tablets need Universal Windows Platform (UWP) apps but developers can still target more Windows users with desktop apps, discouraging UWP development.

Microsoft is also busy removing the advantage of Windows by stepping up its first-party Mac, iOS and Android application development, though this makes sense as a way of promoting Office 365.

That leads on to the next question. If Windows continues to decline, can Microsoft still grow with Office 365 and Azure? Of course it is possible, and on these figures that strategy looks to be going reasonably well. That said, you can expect both Google to continue integrating Android and of course Chromebook with its rival cloud services. Apple today does not compete so much in the cloud, but may do in future. If the future Microsoft has to relying on third-party operating systems for user interaction it will be a long-term weakness.

Microsoft released its financial results yesterday, for the quarter ending September 30th 2014. It was a good quarter in most respects, though consumer Windows and Windows Phone licensing are weak.

Good news outweighs bad though, particularly the company’s success in transitioning Office customers from perpetual licences to subscription, even in the consumer market. It also seems to be performing some magic in the server segment, growing both cloud and on-premises revenue, a trick CEO Satya Nadella attributes to the “unique hybrid and private cloud capabilities that are built into our Servers”.

Here is the segment breakdown, if you can make sense of Microsoft’s segments:

Devices and Consumer licensing is weak, in line with the PC market, a decline in Office consumer review (these figures exclude Office 365), and a 46% decline in Windows Phone revenue – the non-Nokia licensees.

Surface Pro 3 is a hit and brought in revenue of $908 million, “twice the [sales] rate of Surface Pro 2”, according to CFO Amy Hood. The gross margin on Surface is “positive this quarter”, said Microsoft, though it is undoubtedly negative over the lifetime of Surface.

2.4 million Xbox consoles were sold (including 360 as well as Xbox One), and overall revenue is up 58%; a decent performance considering that Sony’s PlayStation 4 is generally outselling Xbox One.

Windows Phone: Nadella reported “modest growth driven by sales in Europe, where we gained share with lower priced devices”. 9.3 million Lumias were sold overall. Non-Lumia devices are expected to decline; Microsoft is not interested in this business, though it said sales were “in line with the market for feature phones.” No mention of the mis-conceived Nokia X.

Devices and Consumer Other is where Office 365 consumer revenue lives. There are now over 7 million consumer subscribers and it grew 25% over the previous quarter (most comparisons are year on year). Microsoft’s ability to shift customers to a cloud-based subscription model is key, especially as more of them run Office on an iPad or Android tablet.

Cloud – Office 365, Azure and Dynamics – delivered revenue up by 128%. Nadella added in the webcast that a “major Azure service or feature” is added every three days.

From a financial perspective, Microsoft has an advantage over cloud rivals Amazon and Google, in that its customers are more likely to purchase licenses for products like SQL Server along with the commodity-priced cloud infrastructure.

Aside: Microsoft created its online slide deck using a beta PowerPoint add-in called Office Mix, which I had not seen before. It creates a video from a powerpoint deck, with the ability to insert audio, video and interactive content like quizzes, as well as screen capture. Then you can upload it to the cloud. It is mainly aimed at education, but might also be useful for, say, journalists doing product review.

When Microsoft first announced Azure, at its PDC Conference in October 2008, I was not impressed. Here is the press release, if you fancy a look back. It was not so much the technology – though with hindsight Microsoft’s failure to offer plain old Windows VMs from the beginning was a mistake – but rather, the body language that was all wrong. After all, here is a company whose fortunes are built on supplying server and client operating systems and applications to businesses, and on a partner ecosystem that has grown up around reselling, installing and servicing those systems. How can it transition to a cloud model without cannibalising its own business and disrupting its own partners? In 2008 the message I heard was, “we’re doing this cloud thing because it is expected of us, but really we’d like you to keep buying Windows Server, SQL Server, Office and all the rest.”

Take-up was small, as far as anyone could tell, and the scene was set for Microsoft to be outflanked by Amazon for IaaS (Infrastructure as a Service) and Google for cloud-based email and documents.

Those companies are formidable competitors; but Microsoft’s cloud story is working out better than I had expected. Although Azure sputtered in its early years, the company had some success with BPOS (Business Productivity Online Suite), which launched in the UK in 2009: hosted Exchange and SharePoint, mainly aimed at education and small businesses. In 2011 BPOS was reshaped into Office 365 and marketed strongly. Anyone who has managed Exchange, SharePoint and Active Directory knows that it can be arduous, thanks to complex installation, occasional tricky problems, and the challenge of backup and recovery in the event of disaster. Office 365 makes huge sense for many organisations, and is growing fast – “the fastest growing business in the history of the company,” according to Corporate VP of Windows Server and System Center Brad Anderson, speaking to the press last week.

Brad Anderson, Corporate VP for Windows Server and System Center

The attraction of Office 365 is that you can move users from on-premise Exchange almost seamlessly.

Then Azure changed. I date this from May 2011, when Scott Guthrie and others moved to work on Azure, which a year later offered a new user-friendly portal written in HTML5, and Windows Azure VMs and web sites. From that moment in 2012, Azure because a real competitor in cloud computing.

That is only two years ago, but Microsoft’s progress has been remarkable. Azure has been adding features almost as fast as Amazon Web Services (AWS – and I have not attempted to count), and although it is still behind AWS in some areas, it compensates with its excellent portal and integration with Visual Studio.

Now at TechEd Microsoft has made another wave of Azure announcements. A quick summary of the main ones:

Azure Files: SMB shared storage for Azure VMs, also accessible over the internet via a REST API. Think of it as a shared folder for VMs, simplifying things like having multiple web servers serve the same web site. Based on Azure storage.

Azure Site Recovery: based on Hyper-V Recovery Manager, which orchestrates replication and recovery across two datacenters, the new service adds the rather important feature of letting you use Azure itself as your space datacenter. This means anyone could use it, from small businesses to the big guys, provided all your servers are virtualised.

Azure RemoteApp: Remote Desktop Services in Azure, though currently only for individual apps, not full desktops

Antimalware for Azure: System Center Endpoint Protection for Azure VMs. There is also a partnership with Trend Micro for protecting Azure services.

Public IPs for individual VMs. If you are happy to handle the firewall aspect, you can now give a VM a public IP and access it without setting up an Azure endpoint.

IP Reservations: you get up to five IP addresses per subscription to assign to Azure services, ensuring that they stay the same even if you delete a service and add a new one back.

MSDN subscribers can use Windows 7 or 8.1 on Azure VMs, for development and test, the first time Microsoft has allows client Windows on Azure

General availability of ExpressRoute: fast network link to Azure without going over the internet

General availability of compute-intensive VMs, up to 16 cores and 112GB RAM

General availability of import/export service (ship data on physical storage to and from Azure)

There is more though. Those above are just a bunch of features, not a strategy. The strategy is based around Azure Active Directory (which everyone gets if they use Office 365, or you can set up separately), Office, and mobile.

Here is how this works. Azure Active Directory (AD), typically synchronised with on-premise active directory, is Microsoft’s cloud identity system which you can use for single sign-on and single point of control for Office 365, applications running on Azure, and cloud apps run by third-parties. Over 1200 software as a service apps support Azure AD, including Dropbox, Salesforce, Box, and even Google apps.

Azure AD is one of three components in what Microsoft calls its Enterprise Mobility Suite. The other two are InTune, cloud-based PC and device management, and Azure Rights Management.

InTune first. This is stepping up a gear in mobile device management, by getting the ability to deploy managed apps. A managed app is an app that is wrapped so it supports policy, such as the requirement that data can only be saved to a specified secure location. Think of it as a mobile container. iOS and Android will be supported first, with Office managed apps including Word, Excel, PowerPoint and Mobile OWA (kind-of Outlook for iOS and Android, based on Outlook Web Access but delivered as a native app with offline support).

Businesses will be able to wrap their own applications as managed apps.

Microsoft is also adding Cordova support to Visual Studio. Cordova is the open source part of PhoneGap, for wrapping HTML and JavaScript apps as native. In other words, Visual Studio is now a cross-platform development tool, even without Xamarin. I have not seen details yet, but I imagine the WinJS library, also used for Windows 8 apps, will be part of the support; yes it works on other platforms.

Next, Azure Rights Management (RMS). This is a service which lets you encrypt and control usage of documents based on Azure AD users. It is not foolproof, but since the protection travels in the document itself, it offers some protection against data leaking out of the company when it finds its way onto mobile devices or pen drives and the like. Only a few applications are fully “enlightened”, which means they have native support form Azure RMS, but apparently 70% of more of business documents are Office or PDF, which means if you cover them, then you have good coverage already. Office for iOS is not yet “enlightened”, but apparently will be soon.

This gives Microsoft a three-point plan for mobile device management, covering the device, the applications, and the files themselves.

Which devices? iOS, Android and Windows; and my sense is that Microsoft is now serious about full support for iOS and Android (it has little choice).

Another announcement at TechEd today concerns SharePoint in Office 365 and OneDrive for Business (the client), which is getting file encryption.

What does this add up to? For businesses happy to continue in the Microsoft world, it seems to me a compelling offering for cloud and mobile.

The “Gross margin” figures above do not tell us much other than for hardware, since Microsoft no longer allocates its research and development costs against specific segments.

Overall revenue is slightly down year on year but only because of a $1778 million decline in the “corporate and other” segment. This means it was a better quarter than the overall revenue suggests.

So what is notable? Windows OEM revenue is up, but only thanks to the business market, and partly thanks to upgrades driven by the end of support for Windows XP. Consumer OEM Windows is down by 15%.

Xbox revenue is up 45% thanks to the launch of Xbox One (and I have a hunch we will see less positive figures in future since Sony’s PS4 seems to be winning the console wars).

Surface (Microsoft’s own-brand tablet) revenue is up by over 50% year on year, to $494 million. It is a significant business, though apparently not a profitable one. Cost of sales was $539 million, says Microsoft in its notes.

Windows volume licensing, which accounts for most enterprise usage, is up 11%, also no doubt influenced by the end of XP support. SQL Server revenue is up by 15%, though in relation to server products Microsoft notes the impact of “the transition of customers to Cloud Services.”

The big winner is cloud services. Microsoft says:

Office 365 revenue grew more than 100%

Microsoft Azure revenue grew more than 150%

Cloud services revenue grew $367 million or 101%

These sums are a little puzzling. If growth was 101% overall, and Office 365 grew by more than 100%, where is the Microsoft Azure growth hiding, or was it from a very small base?

Note that consumer Office 365 is accounted for separately, it seems, as part of “Devices and Consumer other”. There are now 4.4 million Office 365 Home subscribers, growing by around 1 million in this quarter.

Questioned in the earnings call, CEO Satya Nadella talked about mobile-first and cloud-first, adding that the strategy goes across “devices some ours, some not ours.” He also mentioned how the advent of Universal Apps means that “we have a very different way to think about [Windows].” That is partly wishful thinking of course: the Universal App framework is still in preview and targets a still unreleased update to Windows Phone (8.1). Still, that is the strategy, even if it means giving Windows away on smaller devices – we have “monetization on the back end,” said Nadella, presumably thinking of Office 365 subscriptions and the like.

On the business and enterprise side (where Microsoft can be more confident) Nadella also spoke of the synergy between Office 365 and Azure; every Office 365 sign-up enables Azure as a business cloud platform, thanks to Azure Active Directory and other integration points.